Analyzing the Recent Recall of Chinese-Made Products: Under standing the Problem s and Cre ating Effec tive Solutions

• Author: Nicole J. Kaplan
• Position: Graduated Brooklyn Law School in 2003 summa cum laude
• Pages: 11

Nicole J. Kaplan,joined Dickstein Shapiro LLP in 2007 as an associate in the Antitrust & Dispute Resolution Group. Ms. Kaplan represents clients in connection with complex public policy disputes and state government investigations as part of the Firm's State Attorneys General Practice. Ms. Kaplan graduated Brooklyn Law School in 2003 summa cum laude.

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The "Made in China" label suffered a major setback in 2007. A number of highly-publicized recalls of such widely diverse products as pet food, seafood, toothpaste, tires, and children's toys have focused Americans' attention on the potential dangers of products imported from China.¹ In the wake of widespread media attention and heightened public concern, the perceived lack of safety regulations has inspired one journalist to dub Chinese manufacturing as the "Wild West."² The questions facing American companies include why Chinese manufacturers are producing unsafe products, the gravity of the threat, and how American consumer safety laws can be enforced effectively.

The Chinese economy resembles the United States market of the late 19th century more than any 21st century financial system. In America during the "gilded age," the U.S. government was purposefully laissez-faire. In China today, the lack of regulation appears more to be a result of an explosive, but fragmented, economy.³ Such publications as Upton Sinclair's The Jungle spearheaded a grassroots movement that brought about reform in the United States.⁴ In China, however, the only pressure to increase consumer protection has come from the outside, most conspicuously the United States, which depends on China for forty percent of its imported consumer goods.⁵ On top of the persecution of whistle-blowers, Chinese citizens do not have access to the type of information necessary to reveal hazardous conditions.

Is it possible for China to institute higher standards without a free exchange of ideas? Chinese officials and businessmen have something to fear if they are caught cutting corners and putting potentially dangerous products on the market-in July, the former head of the Chinese FDA was put to death under a charge of corruption⁶ and, more recently, the owner of a company involved in a toy recall was found dead of an apparent suicide.⁷ But what does this mean for whistleblowers? There is a strong disincentive to coming forward because, if a person bears any taint of corruption himself, he may be punished.

China has a less than stellar reputation for how it treats individual activists. A number of activists have been prosecuted and/or imprisoned, allegedly on trumped-up charges, sometimes for no apparent reason.⁸ Often, local governments do this because an outspoken citizen can do the most harm to a lowerlevel politician, such as a mayor or governor.⁹ A grassroots movement cannot flourish in this kind of environment.

On top of the persecution of whistle-blowers, Chinese citizens do not have access to the type of information necessary to reveal hazardous conditions. The communist government controls the media and does not allow that information into the pipeline.¹⁰ Even the Internet is strictly controlled in China. For example, Google has a Chinese language site that filters out search results restricted by the government, and Wikipedia has been completely banned in China.¹¹ There is little, if any, access to a neutral point of view-only the government's official word is widespread. It is therefore questionable whether Chinese citizens even know about the recalls that are so highly publicized in the West.¹²

Without proper information and a fear of harassment, any movement to increase product safety will not come from the bottom up, but rather must occur from the top down. Whether the Chinese government has the desire or ability to carry out reforms remains to be seen. In some statements to the Western press, Chinese officials have outright denied that safety issues exist, but other times they have appeared apologetic even stating that "[c]orruption in the food and drug authority has brought shame to the nation."¹³ Most often, however, officials have been defensive, proclaiming the safety of Chinese products. For example, a spokesman for the Chinese foreign ministry recently stated "[c]onsumers shouldn't be scared of Chinese products. They should have a reputation of being good quality, cheap and safe."¹⁴ Officials have also tried to emphasize that any issues with Page 40 Chinese-made products are due to rogue individuals that the government aims to punish. The General Administration of Quality Supervision, Inspection, and Quarantine of China went so far as to release a statement that "[t]he government will never tolerate, [and will] crack down firmly on individual cases of making exports in violation of the law."¹⁵

In order for the Chinese government to solve this product safety crisis, it must first acknowledge that there is a systemic problem. At the very least, this would help alleviate the public relations problems China now faces. In addition, it would reassure the United States government, American companies, and consumers that China will work towards ensuring its products meet the highest safety standards. Instead of facing trade restrictions or boycotts, China could clean its own house while avoiding the intense scrutiny that is now focused on it. There is little chance, however, of China admitting anything. Instead, Chinese officials prefer to blame the West for exaggerating the threat these supposedly dangerous products pose.

Complicating matters is the fact that China's accusations are not completely baseless. Headlines such as "China, Unregulated,"¹⁶ "Shopper Offered Few Safeguards Against ?Wild West' Imports,"¹⁷ and "Tainted Toothpaste Took Unchecked Route"¹⁸ that have appeared on CNN.com, the Washington Post, and in the New York Times evoke fear of Chinese products. At least in the case of the "tainted toothpaste," the threat is actually minimal. Despite the menacing headline, the article itself states, "[e]xperts say it's unlikely that anyone-even a child-could ingest enough tainted toothpaste to become seriously ill."¹⁹ The nominal or non-existent hazards of the Chinese toothpaste have not deterred any media outlets from repeatedly including the toothpaste on a list of dangerous Chinese products without any qualifications.²⁰ Similarly, approximately 255,000 Chinese tires that met United States safety standards, but did not meet the distribution company's standards, were also recalled.²¹ The media has tended to neglect this fact as well and has baldly reported that Chinese tires, among other unsafe products, were recalled.²²

Additionally, there are major problems with Chinese manufactured merchandise, particularly with the use of lead in various products. Between January and June 2007, the United States Consumer Product Safety Commission recalled 120 Chinese manufactured items.²³ Of those, twenty-two recalls were due to potential lead poisoning and nearly all of the lead-containing items were children's jewelry or toys. In August 2007, both Fisher Price and Mattel recalled over a million toys because they were coated in lead paint.²⁴ Because China makes eighty percent of the world's toys²⁵ and children are susceptible to lead poisoning, the most urgent need right now is for the Chinese government and American toy companies to do everything they can to prevent the use of lead paint on children's toys.

In addition to denying the problem, the Chinese government is unable to closely regulate the country's farming and industry. Despite our notions of their communist government as an all-powerful monolith, China's vast size, both geographically and populationwise makes it difficult for the Chinese government to closely regulate all aspects of its economy. More importantly, however, the Chinese economy is incredibly fragmented.²⁶ There are "200 million farms in China, many of them less than an acre in size."²⁷ Furthermore, there are more than 8,000 toy...